June labor force survey confirms economy not recovering despite reopening

August 3, 2021

by IBON Foundation

The June 2021 labor force survey (LFS) shows how far away the economy is from recovering without real fiscal stimulus, said research group IBON. Job generation is hollow with a bloating informal sector and huge contraction in full-time work. The group said that these will worsen with the looming enhanced community quarantine (ECQ) which will push millions of Filipinos into deeper economic distress.

The June LFS reports 2.5 million additional employed since before the pandemic and start of protracted community quarantines in the country, increasing to 45.1 million from 42.5 million in January 2020. This is misinterpreted as a sign of economic recovery, said IBON.

The rise in employment however is not enough to ensure work for all the additional 3.9 million labor force participants. This is because the number of unemployed grew by 1.4 million to 3.8 million in June 2021 from 2.4 million in January 2020. The number of underemployed also increased in the same period by 111,000 to 6.4 million from 6.3 million.

Looking at employment by hours worked, this is mainly due to a huge 3.6 million rise in merely part-time work (i.e. working less than 40 hours), said the group, which bloated to a near record 17 million in June 2021 from an already high 13.4 million in January 2020. In contrast, over that same period, the number of full-time workers (i.e. 40 hours and over) contracted by over 1.2 million to just 27.5 million.

IBON noted that, by class of worker, the increase in employment was largely from a huge 1.3 million increase in unpaid family workers which reached 4 million in June 2021. This is also from a large 1.7 million increase in the self-employed without any paid employees to 12.8 million. In contrast, the number of wage and salary workers in private establishments contracted by 769,000 to fall to 21.1 million in June 2021.

There are now almost as many informal sector workers (19.7 million) as those working in private establishments (21.1 million), said the group. Informal sector workers are approximated here as those self-employed without any paid employee (12.8 million), unpaid family workers (4 million), working in private households (1.8 million), employer in own family-operated farm or business (one million), and worked with pay in own family-operated farm or business (158,000).

Informal sector workers appear to be crowding into agriculture. Employment in the sector increased by 1.3 million to 10.9 million in June 2021. Employment in the wholesale and retail trade sector also increased by 1.9 million to 10.5 million.

The second quarter gross domestic product (GDP) growth figures will come out next week. These are likely to show reasonably high positive growth because they are measured year-on-year and will be coming from the low base due to the harsh nationwide lockdowns in the second quarter of 2020. The adverse labor market trends however belie any interpretations that positive growth shows an economy recovering, said IBON.

The lack of real fiscal stimulus is a major factor in the raging crisis of joblessness. Net of interest payments, the Php2 trillion in government spending in the first six months of 2021 is actually just 9.4% more than the Php1.8 trillion spent in the same period last year. This is no stimulus to the economy. This is even less than the average annual growth in government spending since the start of the Duterte administration. The group said that the economic managers have wrongly misprioritized creditworthiness and fiscal austerity over boosting an economy scarred by more than 500 days of community quarantines.

The ECQs about to be implemented cover less of the country and are supposedly less restrictive than the original round of lockdowns in March 2020. Nonetheless, they are implemented on an economy especially in the National Capital Region (NCR) that has already been seriously scarred by almost a year and a half of lockdowns and gross inability to contain the pandemic, said IBON.

IBON said that in current economic conditions, the proposed Bayanihan 3 and especially its ayuda component are critically urgent. However, it will still not be enough to set the economy on a trajectory of recovery especially if this does not involve new and additional spending over the erroneously austere 2021 national government budget of the Duterte administration.